AUDUSD recently broke below its ascending channel visible on the 1-hour and 4-hour time frames. 

Price has dipped to a low of .7635 before showing signs of a pullback. Applying the Fib tool on the swing high and low shows that the 50% retracement level lines up with the broken support. 

This area appears to have held as resistance so far, and a continuation of the selloff could lead to a test of the swing low or a move down to the next key level at .7600. Stochastic is still heading higher, though, so there may be some buying pressure left for a higher correction.

The 100 SMA is above the 200 SMA but the gap between the moving averages is narrowing to hint at a potential downward crossover. Also, these dynamic inflection points are close to the 50% Fib, adding to its strength as near-term resistance.

Earlier today, Australia printed a stronger than expected 1.1% Q4 GDP reading versus the estimated 0.7% expansion. This also chalks up a strong rebound over the earlier period’s 0.5% contraction. Components of the report confirmed that the pickup was mostly spurred by stronger trade activity.  

As for the US, the lack of upward revision on the Q4 preliminary GDP reading at 1.9% led to a few losses but it looks like traders are banking on a March Fed rate hike from all the FOMC members’ comments and expectations of fiscal stimulus from the Trump administration. 

US President Trump is scheduled to announce his plans for increased infrastructure and security spending, but traders are still holding out for his tax reform announcement. Chinese PMI readings came in mostly stronger than expected so this should be a point in favor of the Australian dollar as well.

By Kate Curtis from Trader’s Way